Tim Bovee, Private Trader: Monday's Finalists: ADS, AAPL, KO

Monday, October 20, 2014

Monday's Finalists: ADS, AAPL, KO

The Texas marketing systems company Alliance Data Systems Corp. (ADS) was the one symbol that survived the early round of analysis over the weekend. It broke above its 20-day price channel on Friday, sending a bull signal, and confirmed it today by trading above the breakout level.

It appears to be a fine bull play at first glance. However, I'm rejecting it as a trade without a full analysis because the three-year chart isn't bullish.

Click on chart to enlarge.

ADS 2 years daily bars

It peaked in March, declined into April, made a lower high in July, declined to the prior low in October, and is now on the rise again. To me it looks more like a triangle than a trend, or at worst, the early stages of a downtrend. It will take a rise above the March peak, $300.49, to persuade me that it is a bull trend, and is 13% away.

I analyzed two symbols as potential bear plays keyed to earnings announcements under my very short term volatility rules. Bottom line: I intend to trade AAPL today, but not KO. See the combined report: "AAPL and KO: Volatility plays".

-- Tim Bovee, Portland, Oregon, Oct. 20, 2014

References

My shorter-term trading rules can be read here. My longer-term trading rules can be read here. And the classic Turtle Trading rules on which my rules are based can be read here. My very short term volatility trading rules can be read here

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.